Monthly Archives

November 2016

November 29, 2016 – Weekly American Wealth Review

By | Weekly Newsletter

Weekly Letter

Clearly all the positive vibes that surround a weekend of good food, football, family and friends had worn off by the opening bell on Monday, as U.S. stocks snapped their winning streak after the long holiday weekend. For the major market averages, Monday’s decline was a well-deserved rest after the gains made over the prior week, with the Standard and Poor’s 500 off 0.53 percent and the Nasdaq Composite lower by 0.56 percent. However, for the Russell 2000 small company index, Monday’s decline of 1.29 percent ended the index’s longest winning streak in 20 years, with 15 consecutive daily gains for the index that began the Friday prior to the presidential election.

U.S. crude oil prices jumped 2.2 percent on Monday to $47.08 per barrel, as investors attempt to anticipate the outcome of this week’s meeting of major oil producers in Vienna. Back in September, the members of OPEC agreed to cut oil production to manage the global oil supply glut. However, the details of that commitment such as who is going to cut and by how much, was left to be worked out this Wednesday in Vienna. So far, OPEC has been all talk and no action, so it will be a pleasant surprise if a decision is finally reached.

This week all eyes will be on the November employment report due out this Friday. In prior months, investors would have use the bellwether economic report to determine the likelihood the Federal Reserve will raise interest rates at their next meeting. However, the Fed fund futures are currently predicting a 100 percent chance the Federal Reserve will raise interest rates when they meet on December 14th, so Friday’s employment report will likely have more of an impact on what the Fed does in 2017.

Sincerely,
Laif E. Meidell, CMT

We hope that you have a great week,
Pat Meidell, Laif Meidell and Heidi Foster

Weekly Economic Update

STOCKS SETTLE AT ALL-TIME HIGHS

An abbreviated trading week was also a historic week on Wall Street, as the four key U.S. equity indices all reached new peaks. At Friday’s closing bell, the Russell 2000 settled at a record 1,347.20 after its fifteenth straight day of gains; it was up 2.37% for the week. The Dow advanced 1.47% on the week to a Friday close of 19,152.14. Adding 1.42% in three-and-a-half days, the Nasdaq ended the week at 5,398.92. The S&P 500, which finished Friday up more than 3% since the election, rose 1.40% on the week to 2,213.35.1,2,5

EXISTING HOME SALES RISE, NEW HOME SALES FALL

The National Association of Realtors announced a 2.0% gain for resales in October. Existing home sales have kept their momentum, even with inventory down 4.3% and the median sale price up 6.0% in the past year. According to the Census Bureau, new home sales declined 1.9% in October, but were still up 12.7% year-over-year.3

CONSUMER SENTIMENT IMPROVES

At a final November mark of 93.8, the University of Michigan’s household sentiment index surpassed the consensus forecast of economists polled by MarketWatch, who expected a 92.0 reading. The index’s initial November edition had a reading of 91.6.4

DURABLE GOODS ORDERS RISE 4.8%

October’s gain in capital goods orders was the largest measured by the Department of Commerce in a year. A 94% increase in commercial aircraft orders was a major factor. Business investment rose 0.4% in October.3,4

THIS WEEK

Shoe Carnival and Thor Industries announce earnings on Monday. On Tuesday, the federal government releases its second estimate of Q3 growth, the Conference Board’s November consumer confidence index and the September S&P/Case-Shiller home price index both appear, and Autodesk and Tiffany present Q3 results. Wednesday brings ADP’s November employment change report, October consumer spending figures, the October PCE price index, a new Beige Book from the Federal Reserve, the NAR’s latest pending home sales index, and earnings from American Eagle Outfitters, Guess, and La-Z-Boy. Thursday, investors look at the latest initial jobless claims figures, the November Challenger job-cut report, November’s ISM manufacturing PMI, and earnings from Dollar General, Express, Five Below, Kroger, Land’s End, Sears Holdings, and Smith & Wesson. The November employment report from the Department of Labor arrives Friday, along with earnings from Big Lots and Fred’s.

Meidell: Oil news helps major markets set records

By | Published Articles

After gapping higher at the opening bell, U.S. stocks continued to add to their gains Monday, extending the rally that began the day prior to the presidential election, and sending the message that the bulls are clearly in charge.

Though the major market averages appeared last Friday to be rising at a slowing pace, and potentially stalling out, stocks were re-energized Monday as crude oil prices leaped higher. The gains in oil came after favorable news from OPEC’s meeting in Vienna this week gave investors hope that a deal could be reached to cut production. U.S. crude oil rose nearly 4 percent Monday to close at $47.49 per barrel, as word spread that Iran and Iraq were backing the proposal to cut output.

All the major market averages closed at record highs Monday while riding on the coattails of crude oil prices. Having multiple indexes break out to new highs shows that the advance is broad, and typically sends the message that the stock market has more room to run. The Standard and Poor’s 500 rose 0.75 percent and the Nasdaq Composite gained 0.89 percent.

Not surprisingly, the top performing sector on Monday was the Dow Jones U.S. Energy index, up 2.30 percent and higher by 4.16 percent over the past five trading days. Other leading sectors over the past week were the Dow Jones U.S. Technology index, higher by 3.97 percent, and the Dow Jones U.S. Consumer Services index, rising 2.19 percent over the same period.

As we head into the Thanksgiving holiday and a shortened trading week, the good feelings around the holiday tend to rub off on investors, usually resulting in a positive bias leading up the event. Market volume also tends to drop off the day before Thanksgiving as traders travel, or just prepare to partake in their holiday traditions.

For the week, energy commodities dominated the market, with the top-performing commodities led by the S&P GSCI Brent Crude Oil index, up 9.87 percent over the past five trading days, followed by the S&P GSCI Unleaded Gasoline index, up 9.12 percent.

November 14, 2016 – Weekly American Wealth Review

By | Weekly Newsletter

Weekly Letter

The major market averages finished mixed on Monday with the Dow Jones Industrial Average up a mere 0.11 percent and the Nasdaq Composite down 0.36 percent on the day. On the surface, the major market averages gave the appearance that investors needed a rest, after leaping higher following last week’s presidential election. However, just as a story can have both a primary story line and a subplot, on Monday the primary story line drifted while the subplot was still exciting. In the case of the stock market, the subplot was the Russell 2000 small company stock index up 1.26 percent on Monday, and now higher by 9.45 percent over the past five trading days.

The recent move higher in small company stocks tells us two things, first, that the liquidity in the stock market is favorable, and second, that we may be entering a period when the stock market outperforms other assets, thanks to the small company leadership we are seeing now.

Investors shunned bonds for a sixth day in a row on Monday with the Bloomberg 7-10 Year U.S. Treasury Bond Index down 0.58 percent. There has been a major shift in interest rates over the past week with U.S. 10 Year Treasury Yield closing at 2.22 percent on Monday versus 1.86 percent just five days ago. Many investors are now asking themselves whether this is the pivot point in the bond market that many have been waiting for, where interest rates now begin to rise.

Additionally, higher interest rates usually lift currency prices, so it’s not surprising to see the Deutsche Bank Long U.S. Dollar Futures Index up 0.98 percent on Monday, and now very close to its 12-month high.

Sincerely,
Laif E. Meidell, CMT

We hope that you have a great week,
Pat Meidell, Laif Meidell and Heidi Foster

Weekly Economic Update

BLUE CHIPS HIT ALL-TIME HIGHS

Donald Trump’s unexpected presidential election win did not rattle Wall Street. Instead, bulls saw the prospect of greater federal outlays and less business regulation in the near future. The Dow Jones Industrial Average closed at a new record Friday: 18,847.66. The Dow 30 had its finest week since 2011, gaining 5.36%. As for the S&P 500, it advanced 3.80% in five days to 2,164.45. Settling at 5,237.11 Friday, the Nasdaq Composite rose 3.78% on the week.1,2

FED’S FISCHER: TIME FOR GRADUAL TIGHTENING

Stating that the central bank “appears reasonably close to achieving both inflation and employment components of its mandate,” Federal Reserve vice chairman Stanley Fischer noted Friday that “the case for (raising interest rates) gradually is quite strong, keeping in mind that the future is uncertain and that monetary policy is not a preset course.” Some analysts believe sizable infrastructure spending under a Trump administration could spur inflation. On Friday, Fed fund futures contracts implied an 81% chance of a hike at the central bank’s December meeting.3

CONSUMER SENTIMENT ROSE BEFORE ELECTION

Displaying a reading of 91.6, the University of Michigan’s preliminary November household sentiment index climbed 4.4 points off its final October mark. Analysts polled by Bloomberg forecast an initial November reading of 87.9 for the gauge.4

CRUDE, GOLD PRICES DECLINE

As Wall Street rallied, key commodities had a tough week. Oil and gold were among them. The yellow metal settled at $1,227.40 an ounce on the COMEX Friday, leaving it down 3.75% at the end of this second week of the month. Oil ended the week at $43.12 a barrel on the NYMEX; it has sunk 7.78% so far in November.5

THIS WEEK

Advance Auto Parts and Smart & Final present Q3 results Monday. October retail sales numbers arrive Tuesday, plus earnings from Agilent Technologies, Aramark, Beazer Homes, Dick’s Sporting Goods, Diebold, and Home Depot. Wednesday, investors consider earnings from Cisco, L Brands, Lowe’s, NetApp, and Target, plus the October Producer Price Index. Thursday, Federal Reserve chair Janet Yellen testifies on the economic outlook in Congress, the October Consumer Price Index is released, October groundbreaking and building permit numbers are announced, and America’s Car-Mart, Applied Materials, Best Buy, Bon-Ton, Gap, Intuit, J.M. Smucker, Ross Stores, Spectrum Brands, Staples, Stein Mart, Walmart, and Williams-Sonoma offer earnings. Abercrombie & Fitch and Foot Locker announce Q3 results Friday.

Meidell: The Feds, not the Fed, make the difference

By | Published Articles

Investors and analysts spend a lot of time watching the Fed — more accurately referred to as the Federal Reserve — to get its opinion on the economy and see how this might impact short-term interest rates, also referred to as monetary policy.

However, it was the Feds, as in the FBI, that jolted U.S. stock market futures higher Sunday evening, after the announcement from FBI Director James Comey. U.S. stocks gapped higher at the opening bell on Monday while making additional gains throughout the day. By the end of the trading day, all the major market averages had recovered more than 2 percent, with the Standard and Poor’s 500 up 2.22 percent and the Nasdaq Composite higher by 2.37.

To say that investors are getting jittery before the presidential election is an understatement, Monday’s gains have erased all the losses over the past week and then some.

Still, some might be trying to determine the outcome of the election based on Monday’s market gains, but we only have to look back to June of this year, prior to the U.K.’s “Brexit” vote, to find a time when that strategy failed. In the case of Brexit, market trends, polls, and even odds-makers were all indicating that the “Remain” vote would win. That clearly is not how things turned out.

In cases like we find ourselves in today, it typically pays to react to the real news instead of trying to anticipate it. Once we know the results of the election, calmer heads usually prevail, even if it’s not our preferred candidate.

Generally speaking, commodities have performed better this week, with the top of the list dominated by industrial metals. This week’s top performing commodities are led by the S&P GSCI Coffee index, up 6.64 percent over the past five trading days, followed by the S&P GSCI Palladium index, rising 6.27 percent.

November 7, 2016 – Weekly American Wealth Review

By | Weekly Newsletter

Weekly Letter

Investors and analysts spend a lot of time watching the Fed, more accurately referred to as the Federal Reserve, to get their opinion on the economy and see how this might impact short term interest rates, also referred to as monetary policy. However, it was the Feds, as in FBI, that jolted U.S. stock market futures higher Sunday evening, after the announcement from FBI Director Comey. U.S. stocks gapped higher at the opening bell on Monday while making additional gains throughout the day. By the end of the trading day all the major market averages had recovered over two percent with the Standard and Poor’s 500 up 2.22 percent.

To say that investors are getting jittery before the presidential election is an understatement, Monday’s gains have erased all the losses over the past week and then some.

Still some may be trying to determine the outcome off the election based on Monday’s stock markets’ gains, but we only have to look back to June of this year, prior to the U.K.’s “Brexit” vote, to find a time when that strategy failed. In the case of the “Brexit”, market trends, polls, and even odds makers were all indicating that the “Remain” vote would win. However, that clearly is not how things turned out.

In cases like we find ourselves in today, it typically pays to react to the real news instead of trying to anticipate it. Once we know the results of the election, calmer heads usually prevail even if it’s not our preferred candidate.

Sincerely,
Laif E. Meidell, CMT

We hope that you have a great week,
Pat Meidell, Laif Meidell and Heidi Foster

Weekly Economic Update

NEW DATA SHOWS BRIGHTER JOBS PICTURE

Unemployment fell to 4.9% in October as firms added 161,000 net new workers, but that was just one positive from the Department of Labor’s latest summary of the U.S. employment situation. Year-over-year wage growth reached 2.8%, the best number seen since June 2009, as average hourly pay rose ten cents last month. The U-6 rate (underemployment + unemployment) fell 0.2% to 9.5%. In addition, hiring totals across August and September were revised higher by 44,000.

CONSUMER SPENDING ROSE IN SEPTEMBER

The ninth month of 2016 saw gains of 0.5% in personal spending and 0.3% in personal incomes, the Commerce Department reported last week. Adjusted for inflation, consumer spending advanced 0.3% for September, as opposed to retreating 0.2% in August.2

MORE EXPANSION AMONG SERVICE & FACTORY FIRMS

The Institute for Supply Management’s twin barometers of the U.S. manufacturing and non-manufacturing sectors were both comfortably above the 50-mark showing growth in October. ISM’s factory purchasing managers index came in at 51.9, up 0.4 points; its service sector PMI declined 2.3 points to 54.8.3

STOCKS PULL BACK

The Federal Reserve left interest rates alone last week, just as many analysts predicted – but investors were more concerned with the upcoming presidential election and earnings, and those anxieties certainly impeded the bulls. Across five days, the Dow Jones Industrial Average fell 1.50% to 17,888.28; the S&P 500, 1.94% to 2,085.18; and the Nasdaq Composite, 2.77% to 5,046.37.1,4

THIS WEEK

Earnings from AMC Entertainment, Dean Foods, Hertz Global, Marriott International, MGM Resorts, Priceline, Rosetta Stone, and Scripps Networks arrive Monday. Tuesday is Election Day, with CVS Health, D.R. Horton, and TripAdvisor joining the fall earnings parade. Wednesday, Wall Street looks at earnings from AmeriGas, Clear Channel Outdoor, Coty, Energizer, Green Dot, Magellan Health, NetEase, Norwegian Cruise Line, Popeye’s, Viacom, and Wendy’s. A new initial claims report comes out Thursday, plus earnings from Kohl’s, Macy’s, Michael Kors, Nordstrom, Nvidia, Ralph Lauren, Sigma Labs, and Walt Disney Co. This Friday is Veterans Day: the stock market is open, the bond market is closed, November’s initial University of Michigan consumer sentiment index appears, and J.C. Penney and Weibo release Q3 results.

November 1, 2016 – Weekly American Wealth Review

By | Weekly Newsletter

Weekly Letter

October usually gets a bad rap as a negative month for the stock market, and it also tends to be a low point for the stock market, the kind of low from which stocks usually rally. However, as October came to a close on Monday, that low point is still not apparent just yet. Part of the reason for this is due to three significant events coming up this week and next, these are the November FOMC meeting announcement this Wednesday, the October employment report this Friday, and the Presidential election next Tuesday. Any one of theses events would cause investors to push the pause button and wait for the results before making any new commitments, let alone all three.

U.S. crude oil fell 3.90 percent to $46.76 per barrel on Monday, after OPEC failed to nail down a plan that would cut global oil supplies over during a series of meetings over the weekend. So far, OPEC has been successful at holding oil prices aloft with verbal promises of a coordinated effort to cap global production. However, OPEC’s inability to deliver may set in motion a larger pull back in the coming months.

During October, the U.S. Dollar rose back to where it began the year and bond yields rose, as signs of inflation may be an indicating that the economy is picking up. The expectation that inflation will rise can be seen in the recent gains in the 10-year treasury yield that closed on Monday at 1.83 percent, well off its July low of 1.36 percent earlier this year.

Sincerely,
Laif E. Meidell, CMT

We hope that you have a great week,
Pat Meidell, Laif Meidell and Heidi Foster

Weekly Economic Update

ECONOMY EXPANDS 2.9% IN THIRD QUARTER

After just 1.4% growth in Q2, this was welcome news. Surging exports and greater inventory investment and federal spending made Q3 the best quarter for the economy in two years, according to the Department of Commerce. The federal government’s core PCE price index was up 1.7% for the quarter versus 1.8% in Q2.1

CONSUMER CONFIDENCE INDICES DESCEND

Last week, the Conference Board’s gauge of household confidence came in at 98.6 for October, down from 103.5 in September. The University of Michigan’s final October consumer sentiment index slipped to 87.2 from its prior mark of 87.9.2

PENDING HOME SALES REBOUND

The National Association of Realtors noted a 1.5% gain in housing contract activity in September, following a 2.5% downturn in August. The August S&P/Case-Shiller home price index revealed a 5.3% annual rise in U.S. home values.2

BLUE CHIPS FARE BEST DURING A MIXED WEEK

Across five trading days, the Dow Jones Industrial Average rose 0.09% to settle at 18,161.19 Friday. Weekly losses struck the S&P 500 (0.69% to 2,126.41) and Nasdaq Composite (1.28% to 5,190.10).3

THIS WEEK

September consumer spending figures are out on Monday, along with earnings from Aegion, Anadarko Petroleum, Loews, Nautilus, and Tesoro. Tuesday, ISM releases its October factory PMI and Archer Daniels Midland, Coach, Cummins, Electronic Arts, Gilead Sciences, Kellogg, Molson Coors, Mosaic, Noble Energy, Occidental Petroleum, Papa John’s, Pfizer, Square, U.S. Steel, Western Union, and Wingstop announce earnings. Wednesday, the Federal Reserve makes its latest policy statement, ISM’s service sector PMI appears, ADP issues its September payrolls report, and earnings news arrives from Allergan, Allstate, AIG, Anthem, Avis Budget, Clorox, Estee Lauder, Facebook, GoDaddy, iHeartMedia, Marathon Oil, MetLife, Office Depot, Prudential, Red Robin, Sunoco, Take-Two Interactive, Time Warner, Transocean, Whole Foods, Yelp, and Zynga. The October Challenger job-cut report and the latest initial claims figures come out Thursday, and Alamo Group, AMC Networks, Avon, Chesapeake Energy, Cigna, Fluor, GoPro, Hyatt Hotels, Icahn Enterprises, Kemper, Kraft Heinz, Lions Gate, Monster Beverage, Noble Corp., Starbucks, and TiVo all join the earnings parade. Friday, the Department of Labor provides its October jobs report, and Duke Energy, Humana, Jamba, and Revlon present earnings.